Bench to Bedside: Why What We're Doing Matters | LSI Europe '22

Transcription

Scott Pantel  0:03  

We're we have a beautiful dinner that's going to be lined up. But before that we have something really special. And this is something that I feel has been missing a little bit from our events, which I'm glad that we're pulling together. And that's to. And I think it's appropriate that we have this discussion now. And it's like, because what we're doing what you're all doing really matters, right? We're trying to raise capital, we're doing all these things. But why we're doing it because we are trying to advance health care, we're trying to help patients. And I don't think we get enough bedside kind of discussion, we get good enough discussion from the clinical side about why what we're doing really matters. So tonight, it's an honor for me to bring up somebody who I have a tremendous amount of respect for. And this is a cardiac surgeon who is affiliated with Stanford mayo, Johns Hopkins, and is at the Medical College of Wisconsin. That's before I bring him up this Dr. David Joyce, and come on up, David, if you can. Dr. Joyce, is not only an incredible physician, but he's also a technology has an incredible mind and with reference to technology. And so what I challenged him to do here over the course of the last two and a half days, was to observe to take things in and to maybe give us some observations at the end of this. So this is like very much fluid on the fly, real time perspective from somebody out that's out there helping patients every day and is very connected, to tell us maybe make some observations about what he saw. And then after that, we're going to bring up Dr. Manny villafana. And we can talk about his view and his history. And we'll tie it all together. This is the grand finale. I'm so happy that you're all here. Let's take this all in. If we have time, we'll do some questions. And then we'll get after it with the reception and, and a nice dinner. So thank you very much, Dr. Joyce. Thank you.

David Joyce  1:52  

Thank you, Scott. Yeah, thanks, thanks to the whole LSI team for what has just been an incredible couple of days here. Well, I want to start my comments from not from the medicine side, but actually from the first question that I was asked on the first hour of the first day of an executive MBA program that I did at the University of Chicago. And the question they asked was, What is the purpose of the firm. And of course, this is the Chicago school. So we went straight to Milton Friedman 1970, the purpose of the value, the purpose of the firm is to maximize shareholder value. And so pretty much everything that we learned in the next two years was kind of focused on that. And obviously, that's extremely important. But nowadays, I think we're seeing there's, there's sort of this movement, that maybe it needs to be a little something more than that, and maybe, maybe the benefits that we create for society, no matter what industry you're in, maybe that's something that we should be focused on. And maybe the shareholder value follows as a result of that. You see, you hear this a lot in the media now. And there's, you know, a lot of companies that are really focused on this in different ways. And, and certainly we can all think of examples where you can create a lot of shareholder value, and the tobacco industry created a lot of shareholder value. And I'm sure everybody in here knows someone who suffered from lung cancer, or emphysema, or heart disease on the way to delivering that value to shareholders. I mean, there's less extreme examples, I think even even some of the next negative externalities that that come out of maybe the automobile industry, from pollution and things like that, these are all things that are on the way to creating shareholder value. There's not necessarily the immediate linkage with value to society. But what every single company that I listen to at this at this event, and every single one of you in here, no matter what your role is, within the ecosystem, every single one of you inherently is focused on the most important value that there is to society, which is creating higher quality of life and longer quality life for patients. There's just, I don't know that there's anything that a person can commit their life to, that's more important than that. And so I think that's, you know, as a physician, that's kind of the thing that really hit me about this meeting was just looking at the the enormous ecosystem that's behind that push. And of course, as a physician, I can only move as fast as the entrepreneurs can take me, I love to try new products, I love to push the envelope on new treatments, but we're at the mercy of how fast this machine can move. The other thing that makes it a little bit tricky, though, is that healthcare is incredibly complex, the health system is totally complex. So even something as simple as you know, we just connected everything to the patient, the patient experience is really, I think, the end game for all of us. And yet, when we tried to define the customer in health care, this was another shocker that came out of business school one day was that actually the patient is not the customer, but in a lot of a lot of the devices and a lot of the things that we work on. A lot of times it's a provider it's the person rendering the truth. treatment to the patient. So already we get disconnected. And of course that person most of the time is not paying for the technology, there's a different system in place where there's purchasing departments and administrators at the at the health system that have to decide which of these treatments are available and which ones are not. So it's very easy, I think, to get disconnected from the benefits that we're creating from for patients, just given how complicated the whole ecosystem is in health care. One of the things that I think really stood out to me was Antoine papiernik, the other night, talked about his experience with core valve. And I found this fascinating because here, he was really doing the exact thing that you should always do in a in a decision about an investment or a new technology. And that's go go talk to the customer about what they think about this product. And he did the right thing. He talked to all the cardiac surgeons, he had great contacts, really good advisors. And they all said no, we don't need that, that's, you know, that's we're doing pretty well with these big open heart procedures. And we're you get these great valves like the one that many villafana has given to the to the two major valves that many villafana has given us, we don't need, we don't need a transcatheter product. And yet, there were a lot of patients that actually did need that because it turns out there was a hole, we thought the pie was this big. But once we had a way to send people home in 24 hours with basically the same risk with with much less invasiveness. All of a sudden, we could expand that to even older patients, sicker patients, and my my grandmother almost made it to 100 this year, and managed to go for an extra three or four years with one of these transcatheter valves that she got in her 90. So the patient like that would have never even been considered for for intervention in the in the previous era. And again, this is just what makes it complicated is that, you know, you can even do the right thing, talk to the customer. And and I think the other thing that that really stood out to me is I'm kind of what people would call mid career. So that means I've been around long enough to see basically every single treatment that we offer change radically. Since I was in training. I mean, basically nothing that I do right now is with maybe one exception that I'll mention in a minute. It's a totally different world than the one I trained in. But at the same time I come to a conference like this, and I see what the future looks like. And it's incorrect. I mean, some of these things just seem too amazing to be possible. It just seems like there's no way we can actually get to that. And but when I look back, I realized that, you know, we're it's not even a question we're definitely going to get there. case, case in point would be my my chairman, who honestly was one of my most important mentors at Johns Hopkins. He was he was a little bit anti cardiac surgery. So when I, when I told him I wanted to go into that, he said, you know, you're going to be one of the best train cab drivers in the entire country. And of course, that was before Uber. So I don't know if that that turned out not to be true on a couple different levels. But another thing that he said we had a grand rounds one time on very early DaVinci Robot, and that one of the surgeons got up and presented all these beautiful cases, videos and things that were being done. And at the end, he got up and he said, you know, that looks like an operation that's waiting for an indication. Well, I learned yesterday that 19 million times last year that there was a patient that turned out there was an indication for that type of technology. And we saw multiple examples of that here. But you know, as much as we're focused on artificial intelligence, and wearables and all these exciting new technologies, it's interesting that there's still a lot of very, very straightforward problems that haven't even been solved yet. The operation that is the most commonly performed operation in United States is a coronary artery bypass. And this has been well over 50 years that we've been doing high volumes of this operation. We've tried a few things, some of them have sort of worked. But really the operation that I do when I bypass a patient is basically identical in terms of the technology we're using is back in the in the 1950s. And so there's a need there. I mean, we definitely have a need for better tools and things just like what we saw in the world of transcatheter valves that we can kind of advance this field, you know, across the horizon. But at this point, there hasn't been much traction, however, I want to I want to bring up and introduce you to Manny villafana. You all know him, obviously, but Manny is such a legend. I wanted to try to think of a sports analogy of somebody who's me seven IPOs. What's the sports analogy for that? Well, maybe it was Lance Armstrong in the Tour de France, but he cheated. So that doesn't work. I mean, you just can't You can't come up with another example of somebody who has been as successful, created as much value for shareholders and most importantly, saved as many lives with his efforts as many villafana. So I'd like to bring him up here. And we're just going to have a little bit of a chat. Just some some history of of his career and what he's accomplished. But also, I'd like to hear a little more about medical 21. So, I'd like to start, anytime you're talking about a legend, it's always it's always hard to know where to start the story. I mean, you go all the way back to the beginning, you kind of hit the high points and work backwards, it's always a challenge. I'm going to arbitrarily pick a very specific time that I want to talk to you about when, when things kind of really got going in what we now recognize as ground zero for medtech, Minneapolis, Minnesota. And I want to talk about the day that you met with Earl Bakken and talked about the possibility of coming to work at Medtronic. And when we think about Medtronic, now we this is a company that's based in Ireland, they well over $30 billion dollars in revenue, 100,000 employees. What was it like? What was it like when when that conversation took place?

Manny Villafana  11:18  

Hi, first of all, again, I join David and saying thank you to everyone here to Scott and his staff. Maricela is one of my favorite ladies. I call his St. Maricela. Okay. Not because of all the things she does, but she has to work with with Scott. Okay. Anyway, going way back to ancient history here. I got a call from the secretary of Earl Bakken, who was the founder, co founder of Medtronic. And at the time, I was working for a little entity out of out of picker X ray, called picker International. And we were representing many small little companies to export their product from the United States to England and in Europe and the rest of the world. And, and I was working with a little thing called a pacemaker, just starting out. And so, after working a few years, exporting this product, we finally got it started. So I got a call from from Billy saw ca and she says, Manny, can you pick up Earl at the airport? He's coming into New York, and and take him up to White Plains where the company was where picker internationalist, sure not a problem came with one of his new vice presidents that guy named Charlie Cudahy. So I take them and finally get him into a hotel room. And that was a separate story. And, and I'll pick up tomorrow morning, I'll take it to the office. And they said, Manny, aren't you interested in why we want to talk to you? I said, No, you want me to take you to pick it? No, no, no, we're here to hire you. We want you to join us. And here's a little company that has 75 employees. That's a company that has never made a penny. Okay, it was already the time I'm talking to him was already 1718 year old company. Think about that. This is a great Medtronic and still not making a penny had gone through two bankruptcies. And and I joined them. Well, did you talk salary? No. Contract? No. Why not? I said, I was given the opportunity to get out of the South Bronx, that's where I was born and raised. And anybody who's lived anywhere near that area knows that if you can get out of the South Bronx, you're gonna get out of the South Bronx. And that's how it started. Years later, it was interesting that a guy named Bill George, who was a, one of the former presidents again of Medtronic was introducing this talking into a gentleman and looking at me pointing at me and saying, and here's a guy that started Medtronic, and I went directly to the guy and I said, No, he's full of, you know what? I didn't start Medtronic and Bill George, who was a very distinguish President I really made some major changes in Medtronic, said Manny, you are wrong before you came on board, we can never make a penny we did not sell. And of course, we had zero knowledge of the international marketplace. Met Medtronic got started when you joined us. Anyway. That's the beginning.

David Joyce  15:25  

So I find it ironic having grown up in Minnesota that getting out of the Bronx and heading to the frozen tundra of Minneapolis. It was it was an upgrade, but But I see what you're saying. So okay, so you're at Medtronic and your, your cert, you're doing sales down in South America. And you're you're watching these early pacemakers go in. And the next thing you think about is, you know, we need we need some better tech.

Manny Villafana  15:51  

Yeah, well, first of all, I ended up living in South America in Buenos Aires, Argentina for a couple of years for Medtronic. And I was one of the early people that made it a point that you go into the OR to teach, we had to teach how to do pacemakers. It was so early that what do you what's this? That's a catheter? What do we do with that we got to go down to the juggler, etc, etc, to get into the heart and you had to teach that right in the OR. Now move over, let me have the let me have the catheter. Okay. But it was amazing how they were starting to fail, so early. I mean, the average pacemaker only use the last 12 to 18 months. And I was in places where it was lasting, even far less than that. So over the, there was a period of time there when we had so many failures that I call up Earl Bakken from South America, and he says Manny, you better come up here. So I flew up, and he showed me a chart, it wasn't that you went to a computer was no computer, he had laid out a very big, very big paper chart, okay with numbers. And this is our problem, man. If these are failing this group, that group is failing and stuff like that. And it was the old Mercury zinc batteries that, you know, just had a failure rate. And this particular time, it was even greater than ever before. So at one point, I said, you know, what are we going to do? He says, We're trying our best. When I got back to the office, my secretary told me, Manny, we have so many doctors calling us and patients that I finally figured out, I called back and I said, I want 43 pacemaker Don't ask me how I came up with 43. And why not? 50? Why not 4043 pacemakers? I remember the number. How are we going to get them in? Remember, South America, at least in Argentina, to get any product through customs, it took two weeks. I didn't have two weeks time. So I call the two largest in planning doctors. I call their secretaries or I'm sorry, one was a scrub nurse, and another and then my secretary, and there was 1235 of us. We went and I said I call Earl, Earl. I want 43 pacemakers right away. We arranged it to pick them up in Miami. And we were trying to figure out how we're gonna get these things in. Right before I got on the airplane, one guy came up it was docked to do so. Alexandra do so. And he gave me a jacket and not a jacket coat and wrinkled, normal wrinkled. It was dark blue. Except this one had 16 pockets. It was used for smuggling. Okay. And so we met as a group and said we're getting on the plane we're going to this hotel it was it was like big modern hotel had four big buildings I remember and we walked into this room, and in the corner room is big pile of boxes with 43 pacemakers and make a long story short. We were taking them out. We were putting them in our pockets. I remember we all agree that we get rid of the boxes and all the paperwork you don't need that we just getting the pacemakers in the sterile pack. I remember the girls were putting in their in their pants and bras and everything's. I mean, it was really unbelievable. And I'm envisioning This better work or else you will never see me again. Oh, Okay, they will not throw the key away, they will burn the key, they will melt the key or something. So anyway, we finally got back. And as I'm getting off the plane, and we all separated, we were on two planes coming back so that if any one of us got caught, at least half would get through. And we're doing this just to try to help a patient. There was no money benefit, there was nothing. Okay, but by law, I suppose we were smuggling something like that. So we got in as I get off the plane, and for some reason, I was one of the first ones off the plane. And in those days, the plane was parked outside, and then you walk down the stairs. And right at the bottom of the stairs. There were two guys wearing the trench coats. You know, if you've ever watched Casa Blanca, you know, Humphrey Bogart was always wearing this trench coat. They were exactly the same kind of trench coats. Okay. Now I was I was hesitating how many people went. And I said, Five. And I remember is because the sixth person I wanted to go was our rep. The representative, a guy named Kai vinyl. I said that you're going to join us in No, no, no, no son urine. I'm not going to join you. And I got really angry him. What we're going to take the risk, man, at the end of the day, you're the ones gonna get the pacemakers, you know, and we're gonna say, the market for you and all that sort of Nelson, you're, I'm better here than you going. I said, Okay. So when I get off the plane, and I'm walking down these two guys, and the one says, Son, you'll be fine. Yeah. Yes, sir. He pulls out this beautiful gold blaring gold badge says odd one us which in Spanish means, you know. Customs, okay. Treasury Department, going to jail kind of badge, you know? So, he takes me says, Is this all you have? I said, Yes, sir. You know, I didn't have to check any bags or anything. This is all a little attache case. So follow us. And as I'm walking through, I see my secretary and I see Dr. Do so going through customs. And my secretary starts talking about to the to the agent there. Oh, young man, how are you? Hi, John. Hi, Joe. Flirting with the guy. So she II wouldn't look into it into the bags. And she got through. And Dr. Dr. Zhou had another problem. But there I was kind of sweating bullets, you know? And he walks me right out. And he says, Welcome to point Osiris. What happened? Now a corner of my eye see Qivana and come out, blinks his eye. Gotcha. He stayed behind. He bought a whole big can of grease and he greased everything necessary for me to slide through.

David Joyce  23:24  

So I think, if I remember right, I think Jordan Belfort should have credited you in his book, The Wolf of Wall Street on those tactics, because that is an incredible story. So So now,

Manny Villafana  23:38  

Let me just say at that point, it became very evident, we had to change the way of making pacemakers. And when I got back from Argentina, I went to URL and two staff members, guys, we got to do it a different way. And I had become informed of a technology using, believe it or not, lithium batteries, not for the car, but with the initial concept of being putting it into a medical device. And, and it was presented to Medtronic and they said, Nah, never work. Okay. I took the idea. And I went to them being on the inside of Medtronic. And I said, Come on, guys. We have to do it this way. And he said, No, I never work. And at that point, I said, Well, I'm going to pursue it. I did. I had a badge on my Medtronic badge on my shirt lapel Pelham. And, and the president of the company at the time, which was no longer Obachan walked me out the door, walk me down to the we took the elevator down to the first floor. And at the reception desk, he she pulled the badge off, gave it to this recession, the receptionist and walked me to the front door of the door. Because I told them, I will I was gonna do it. And he knew that he wanted me out of the building before any of the other employees would join me and things like that. So that's that's how the lithium power pacemaker started, I started to work with a guy named Bill Greatbatch, who had developed a new type of battery. And I said to him, here's the deal. If you promise never to make a pacemaker, I promise never to make a battery. We shook hands, no lawyers, no paperwork, he went off to start a company called W GL, which became a multibillion dollar company. And I started a little company called CPI, which became Gaiden is not Boston, and another multibillion dollar company. And that's how the lithium pacemaker began.

David Joyce  25:49  

So lithium, pacemakers radically changed the entire field. CPI is growing by leaps and bounds, you're you're now in the process of building a brand new million square foot facility to keep up with production, because they're the entire field and particularly at CPI is is getting big fast. Now, at that point, did that just seem like a good time to disrupt a completely different area of cardiovascular or how did we go for.

Manny Villafana  26:22  

Had nothing to do and couldn't know we were doing the lithium pacemaker and our biggest challenge was that we had to make enough of them at that point. At one point, we had already gone from 5000 square feet, which is where I start companies. And within a period of about two years, we were already outgrowing 150,000 square feet. Okay. We were open seven days a week, 24 hours a day, the lights never went off. And we were trying to make enough of these pacemakers. And when all of a sudden, one of our customers or two of our customers a guy named Dr. Parson at Newark, New Jersey, and Dr. Nicolof in Minneapolis, said Manny, you've done a good job on Pacer. But we really need is a heart valve, honest to God, I didn't know what a heart valve was. I mean, I knew what it was. But I mean, I knew nothing about heart valves. I couldn't even name the four valves in your heart. And so I went to the guys and said, Hey, guys, Nicolof, wants us to make a valve CPI and make a valve. And I clearly remember clearly remember, what I propose it to the other guys is What are you talking about Manny? We don't even have enough time to take a piss around here. You know? And, and I said, Well, look, I've done my thing. I mean, one of the things you got to know about Manny is I don't get my jollies watching a company go from five employees at 50 to 100 to 1000 5000. That's not my thing. My thing is to create, do things that people say can't be done, and make him successful and get them into humans. That's all. That's my job. Okay. And so I said, Well, guys, I think I like to go after this. And we were emptying out one building, going across the highway, we were building, literally at the end of the day, million square feet. If you go now and see where Boston Scientific is, and CPI and all that. That's about a million square feet. Okay, and I want to do it. And so I left the company and started a little company called St. Jude Medical, in one of the buildings that we were abandoning, as we built the new buildings. And that company, again, grew even faster than CPI. added in a technology that people say many you're crazy might make. One of my very, very good friends was a electrophysiologist at cardiologist David Freeburg. He says you are not going to do that Manny. And he's a good friend of mine said why can't I do that? He said many all you will end up with is you will have a valvular patient and you will end up with an artificial valvular patient valves were so bad. The most common valve at the time was a thing called a ball, ball and cage valve. The star was Valve made by a company that we know today is as Edwards okay. That was the most common vowel and I'm I remember early, early on, I took the St. Jude valve to visit a doctor in Paris, where in France, everything was a star. Oh, it's valve. I don't know, for some reason, virtually everything was that. And he said, You want me to put this in the patient? And at the time, we only had maybe 1020 implants in the whole world? I said, Yeah. He says, Do you realize if I put this into a young lady, the you know, if we have a little problem, her face will become distorted. You her tongue will probably hang out of her head might go blind. And if we are lucky, she will die. At this time, my rep who has never handled valve before and me, I got 20 valves under my belt. Okay. We were all like, peeing my pants. I mean, we just were scared. How do you answer that question? What are we getting ourselves into handling valves. And the only thing I could say to the doctor was, that's right, I want you to use this. Because if you don't use it, we will continue to see young ladies with their faces that started going blind. And as you said lucky you're dying because at that time, the thrombo embolic rate of a ball and cage Val was about 6% per year. Which means if they survive the first year, without a stroke, the second year, the chances are 12% and 18%. Okay. And the following day, the doctor put in a St. Jude vowel, because he like all of us, the entrepreneurs in this room, we have to take the risk and do the first step, otherwise, nothing will happen.

David Joyce  32:11  

So I can remember, I my my father is a cardiac surgeon with me in Wisconsin, and also part of the Medical 21 board. And I can remember I think I was in training but I remember going to one of the big cardiac surgery meetings with him and St. Jude was celebrating their their million implant with with no structural deterioration. And I just remember him putting his arm around me and saying can you believe that I mean a million of these things. And they have yet to have one single failure.

Manny Villafana  32:45  

Structural failure. Yeah, easily. Okay. No, it continued. And of course, today as we take a look at history, we're talking about four or 5 million patients walking around at St. Jude. By the way that the pacemaker is the CPI pacemaker it just CPI not other pacemaker just CPI, we have over 10 million patients on that one.

David Joyce  33:12  

So of all the products, I mean, the St. Jude valve was every med tech companies dream. I mean, what what was the market share at the time that you got the idea that maybe this would be a fun field to disrupt and bring in and compete with this juggernaut that you created? Tell us a little bit about that.

Manny Villafana  33:33  

Well, so you're talking about (unaudible)

David Joyce  33:37  

Yeah, yeah, exactly. So we go from St. Jude, which is basically now a company that is unbeatable in the in the valve market. I mean, this is this is the coca cola with no other there's no competition and

Manny Villafana  33:50  

Call it the Oreo cookie. Yeah. How do you compete against Oreo cookies? Well, it turns out that there was room for improvement. And, and there was a need from a group of guys who said, Manny, you gotta get back into the valve business. And I said, What are you talking about? I've been there done that, you know, and they showed me they brought me the data, that occasionally St. Jude Valve will clog up and stuff like that. And there was a better way of, maybe we can make it better. And one of the things that I saw personally was that it took time to implant the St. Jude valve. It's you got to be careful if you don't put the sutures around the ears if you know what I'm talking about when I talk about that. So we decided to do another company called ATS medical. And the biggest challenge was, we always have a challenge. How do you get into the market and the biggest challenge was, how do you compete? How do you compete against Oreo cookies in our country? The US Oreo cookies on the cookie Market, okay, Oreo cookies with a glass of milk cannot beat it, forget about it. Okay. So how do you compete against Oreo cookies. And again, it was a case of teaching, educating, and we were able to do it, okay, we improved on it, we made a little bit easier to implant, the T rate was lowered even further as we open up the pivot. And, and we were able to improve it. And then Medtronic came along quite early, much earlier than what you would see these days and took us a while. Okay. And but when I left the company, we had about 23% of the market. Okay. And my personal goal on anything I do, if I don't hit 20% of market, I consider myself a failure.

David Joyce  35:51  

So I want to add a little bit of an anecdote to the ATS story, because no doubt the tech was better. It was, like you say the best valve on the market still is. But but there's so much more that was go. I mean, there are so many clever things that you guys were doing. And you know, as a surgeon, the one that I always think about is, so valves, up until the ATS we're all size on odd numbers. So most patients have probably the average would be a 23 millimeter annulus, where the circle where the valve sits in is 23 millimeters. And they go from 19 to about you know, 29, basically 33 Yeah, depending on the division, depending on the position, you're going to put it in the heart. So every single valve on the market is odd numbered. And of course, when we're when we're getting ready to sew the valve in one of the things we always ask the person doing the echo for the case, the anesthesiologists usually is you know, can you measure the annulus for me, because I just want to get an idea of what we're dealing with here. Maybe I need to enlarge it, you know, what, what do we got, and so the the game that the anesthesiologist learned to play because they knew that as soon as they said, that's a 21, we're gonna say up got a 23. And I guess your maybe need to go back to the nose a little bit of a rivalry between the, you know, across the blood brain barrier, as they say. So the anesthesiologist got smart, and they started giving us even numbers. So that's a 20, you know, and so then you basically, you know, you can't really talk too much trash, because, you know, if it was a 21, you know, what are you going to do, but ATS decided to use even numbers for the valves. So even even those little things that, you know, obviously, you know, as a surgeon, you know, your, your anesthesiologist tells you, this is a, this is a 22, I mean that that's a that's a nudge that you're not even thinking about. And it's it's been, it's amazing to me to think about all those, all the things that went into that company.

Manny Villafana  37:48  

The key thing is for all of the entrepreneurs here, if you're working with surgeons, there are a lot of thumbs out there. Okay, there's a lot of thumbs remember, when a doctor goes to school, summer graded, A, I gotta be a ceased. If they get an F, they don't graduate. But you have all of these in the range. And there are some surgeons that really you got to hold a hand a lot. And so one of the things that I said in making the ATS valve is I want to make it as easy as possible to make this valve implantable. And I bring that up only because the work that we're doing now in the field of bypass surgery, I said to my engineers, as we started, I wanted to design a product in which every surgeon would not have to make one change. If I have 1000 surgeons here, believe me, there's about 1000 different ways of implanting a graph on the heart, taking the vein, putting on the heart, some cut it a certain way, another way, third way, 1000 ways. And I said, I don't care which way he or she wants to cut that vein. I want to graph he can cut any way he or she wants to cut it. You got to do those things when you're thinking about your product is the ultimate user. And little things like which way is he gonna cut it?

David Joyce  39:30  

Yeah, and I on that note, I think this is a this is an appropriate time to talk a little bit about Medical 21. So now that the heart rhythm field has been has been pioneered, we've we've gone from that to structural heart this I mean, talk to us a little bit about the total addressable market of ischemic disease and coronary artery bypass relative to the other companies that you've done just to help us understand the scale. What's different about medical?

Manny Villafana  40:01  

First of all, when we started St. Jude, let me go back for a second. And when we got started St. Jude, the world market was about 65,000 valves. And we know what happened from there. When we started CPI and a pacemaker pacemaker was only about 70, 75,000 pacemakers per year worldwide. Well, we're going to talk about doing cardiac surgery, trying to eliminate the harvesting of vessels out of your legs out of your arms off your chest, and putting them putting an artificial graph. The addressable market right now, just for the cardiac area, just for the heart is between two and a half and three and a half million grafts. This will be the single biggest product ever developed for implantation in the body. I'm not saying there's not other things that are big, this is big, okay, you can take all the pacemakers, all the heart valves, all the fibula, remember, we also made a Tribble there. Okay, and this is bigger than all st combined. That's how big it is. And we have to make it in such a way that it's user friendly. But the goal is to eliminate the harvesting of vessels. And we're doing that we hope that within the next two months around November, that we can start doing some human implants. We're very excited about it from here, I go to Switzerland, there are four different centers waiting for me to give them all the data because they all want to start. I've never had a product in which there was so much interest to get started right away. Okay. I don't know what else to tell you. Well, I think Mark is, well, $10 billion.

David Joyce  42:02  

Here's a question I kind of feel like you kind of left out a little bit of I mean, I want to hear a little more about your strategy because I, we use little saphenous vein for a lot of different things in surgery, we got peripheral bypass, we got dialysis access, I can think of about 10 things outside of this part of the anatomy right here where a nice Medical 21 graph might be very handy. So how did you talk to talk about the business strategy with you know why, why? Why go right after cabbage and only cabbage as your as your first beachhead in this whole game?

Manny Villafana  42:36  

Well, come on, let's let's be honest here. I went to my guys the other day. And I said, When can we make 1000 grafts in one day? They looked at me kind of silly. He said, What do you mean, but we'll get there. I said, Well, we gotta get there real fast. Because 1000 grasps per day only represent 10% of the market. If you want to do some math, all right, if we sell them, let's say, between three and a half, and three and a half 1000 Or five $5,000. Let's just choose 5000. It's an easy number to operate on. That means that we're selling $5 million a day. Which if you multiply by 300 business days, okay, so you're at a billion and a half per year, and only representing 10% of the market. Okay. Now, I don't know about you, I don't know if your god I'm not God. I can't think numbers that big. I can't even figure out how we're going to make 1000 per day, nevermind that if you start using this device in peripheral areas, and renal areas and, and dialysis and pediatrics and things like that, which can be used, the way our graph is designed, it can be used in any one of those areas. Okay, I can't handle that number right now. So when I talk about numbers, I'm only talking about the heart. I'm sure somebody will come along, take us out and say we're going to do in other places. Good luck, you know, it can be done. I mean, I've already been approached by by vascular surgeons who have said to me, Manny, if you give us this, we will do more than you do on heart. The reason we don't do more is you already taken a mountain for patients, you know, but now if you give us this, we can do even more. So even by using peripheral alone would probably double that market. But it's just too big. This is talking about the heart. I feel very comfortable with the heart. I don't have to go any bigger than that right now.

David Joyce  44:56  

So you mentioned the team and I think I think it's remark that nobody has been able to demonstrate long term patency of any prosthetic conduit in a in an animal. And yet this team has has developed and modified and succeeded in how many animals?

Manny Villafana  45:21  

We have done, we have done somewhere on 95 to 105 animals. But but you know, we, it isn't all one design is it's different iterations. That's not working, started over. You know, we start, we have 14 iterations. And I said to somebody the other day, hey, wait a minute. Wait, wait, wait, wait, don't spit that out. You know, when we say 14 iteration, while you know, that's been a waste of time. Now. When I was doing St. Jude valve, I went to the back back to back part of the office and to our machine shop. And in our machine shop, there was a guy named Charlie Hall, Charlie Hoesley, heavyset kind of guy, big belly. And he had, he was wearing a leather apron. And he was the machinists. And he was crying. I said, What's wrong, Charley? He said, Manny, do you realize this is the 26th iteration of the St. Jude now, in other words, we had tried 26 different designs and modifications to come up with the St. Jude Val. So when my guys were getting a little nervous, Manny that we'd done 10 on this 11. And we thought for sure, we had it at 13. And we shows our data to our advisors. And I could see looking in the eye. Well, Manny, I said, Show on to 14. So we are in the 14th iteration. We have animals now that are way out there. We're approaching one year. In fact, I'm gonna talk talk about him. He and his father and plant one of our graphs and an animal and usually we implant it to the LA the, the Widowmaker the heart. But that particular animal, the LED was embedded in the heart. So they can only use a small om a small vessel, small diameter vessel. And they said, both he and his father came out of the OCR and said, Oh, Manny, I'm sorry, we couldn't do it on the LED. We found a small little om we would never do this in a human, it's too small l fail. And we hooked up to the graph to that. And and what was your your father said? Yeah, probably last only 24 to 48 hours. Okay, so we first looked at that we did an angiogram and 56 days, and I went call them up and I said, Gee, I don't want to call you guys a liar. But this sucker is still working with 56 days. Well, we recently destroyed the animal, opened it up at 320 days. Okay. And we cut it open. And the graph was gone. The artificial graph that we had developed, was gone. The way we designed this graph is that we make it from a certain type of polymer, a multitude of polymers. And then we wrap it, or with a nitinol wire, okay. And then we implant it in through a period of time, the polymer is absorbed into the body and is replaced by the human endothelial cells creating a brand new graph for the patient, a graph that's being created by the patient's own cells. It was gone. All was left was an endothelial graph, made by the patient strengthen by the nitinol wire that will stay in the patient for the rest of his life or her life. Okay. Stronger than any other vessel in your body. That's what we have done.

David Joyce  49:39  

So not surprisingly, this product has gained a lot of traction and a lot of interest from investors. And I want obviously funding is going to be an important part. I mean, we go down the list of things that we we think matter in a startup, obviously, it's incredibly novel, brilliant idea that for this graft. Nobody's ever done anything like that before, we've got a great team with an entrepreneur that's done seven IPOs. So that, you know that sounds good. We've got a product that I can say, as a surgeon, I've, as you said, I've, I've, I've played with it. And I think even if I did have 10 thumbs, I could have probably managed to do you know, it just makes your life easier takes an hour and a half out of your operating time because you're not sitting around waiting for that vein to come out of the leg. So clearly there's there's going to be an interest in terms of investment. And I wonder if you could talk a little bit about kind of the recent news that we got on on the individual investor, and then maybe a little bit also about the reggae, and maybe not everybody in here knows exactly what is involved in that. So maybe kind of talk through that a little bit.

Manny Villafana  50:43  

Well, mainly for the entrepreneurs are here to looking and having the exact same problem creating something, how do I finance it and things like that? Over the years, we have been very fortunate and being able to do financing through individuals, and eventually an IPO. Right now, since we ended up working on a product or technology that took a long, long time. And we started in the seventh year on September 16 was our seventh year or have been in sixth year, and now we're on to our seventh year. You we don't have any revenues yet. Okay. And you kind of start, you can't do an IPO these days without revenue. It's very, very difficult to I wouldn't say it's impossible, it's very difficult. So Scott, with been working on reggae financing, and this new law and stuff like that, so many, why don't we give it a try? Okay, it would be phenomenal to be looking at his medical 21, where the 21 represents the 21st century, when we do this, a 21st century type of financing to finance this company. And through the team that Scott has put together, we're doing a financing that allows both the accredited and non accredited investor to participate in what we're trying to do, which is new technology to help patients and there are a lot of people out there will say, I'm going to do it not because I might make money on it. But I'm helping something in particularly since grandma had bypass surgery and she struggled, okay, or my uncle is going to have it tomorrow, you know, if we can do these things better, why don't we do it? And why don't we make an investment in this. So that's how we have been financing. Recently, we announced that, again, through Scott's help, we were able to find an individual who was willing to put in make a commitment to us for $20 million, which takes us a long way. While we are still doing the reggae the reggae is something unlike a IPL where you you identify your your financing and you get it done. And your check is paid to three days after you hope you're affected. With a reggae it takes time as the money comes in. And that's about the only difference in you can reach both the accredited and non accredited investor.

David Joyce  53:29  

Well, great, I'm gonna go ahead and open up to the rest of the group here. I know that I have no question that a lot of people would like to get some questions answered and hear more stories. So rather than then continue the dialogue here, why don't I Why don't I just if you guys want to raise if anybody has a question they want to ask or something they want to follow up on. Just raise your hand and I'll come bring you the mic.

Manny Villafana  53:52  

a silly question. Whatever you ever want to, why come on this got to be something like that. Okay, yes. 

Audience Member  54:03  

Were you all wearing in the same color rain coat.

Manny Villafana  54:05  

 Oh, no, it was a blue raincoat that I had. The other guys did not have rain coats. And and, and one doctor went on a different flight so you wouldn't get caught with all of us. And yeah. Yeah, I don't tell that story too often, because there might be an agent from Argentina here. We've been following you for all these years. Yeah. Well, thank you very much for all your time. And again, Scott, thank you for great meeting and bringing us all together. If you ever have any questions, grab me somewhere. And, and thank you David for for doing this.

David Joyce  54:46  

Thank you many great stories.